Workspace Group reports a 47% decline in annual pre-tax profit due to COVID-19 restrictions

Written by: Wajeeh Khan
June 5, 2020
  • Workspace Group reports a 47% decline in annual pre-tax profit due to COVID-19 restrictions.
  • The London-headquartered company proposes a 10% increase in its final dividend payment.
  • The office-space provider reports an £8 million decline in underlying valuation of properties.

Workspace Group (LON: WKP) revealed its annual profit to have reduced by almost 50% on Friday. The office-space provider attributed the decline to the Coronavirus pandemic that weighed on property valuations. In the previous financial year, Workspace had posted a massive increase in annual profit. The Group also highlighted a significant decline in new business enquiries in almost three months.

Shares of the company were reported 3% up in premarket trading on Friday. At 808 pence per share, Workspace is more than 30% down year to date in the stock market after recovering from 560 pence per share in March. Learn more about how to invest in the stock market.

COVID-19 fuelled rent payments defaults in the March quarter

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The March quarter was financially challenging for office-space operators as COVID-19 pushed companies into relying on work-from-home arrangements. Consequently, Workspace Group and its competitors faced several rent payments defaults.

The providers are now hoping for a sharp increase in demand for office workspaces once the health crisis subsides. According to CEO Graham Clemett:

“We expect that the structural shift in the office market towards flexibility will now accelerate more broadly.”

In the short term, however, the London-headquartered firm forecasts its operational performance to remain under pressure attributed to lower rental income.

Workspace also accentuated in its report on Friday that in terms of final dividend payment, the company has proposed an increase of 10%. Its full-year dividend, as a result, will now be 36.16 pence a share.

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Workspace reports an £8 million decline in underlying valuation of properties

As per the FTSE-250 listed company, its pre-tax profit in the financial year that ended on 31st March came in 47% lower at £72.5 million. Its properties, it added, saw an £8 million decline in underlying valuation as compared to a £61 million increase that it recorded last year.  

In the full fiscal year, the company reported a 10% increase in its net rental income to £122 million. The occupancy rate in the recently ended financial year registered at 93.1%. Workspace has not received financial support from the British government.

Workspace Group also highlighted in a statement on Friday that it is committed to adjusting its office spaces for enhanced safety as Coronavirus restrictions start to ease and companies plan on resuming operations.  

The £1.46 billion company performed largely upbeat last year with an annual gain of a little under 50% in the stock market. Workspace currently has a price to earnings ratio of 10.88.